Granularity in Banking and Growth: Does Financial Openness Matter?
Franziska Bremus, Claudia M. Buch
IWH Discussion Papers,
Nr. 14,
2013
Abstract
We explore the impact of large banks and of financial openness for aggregate growth. Large banks matter because of granular effects: if markets are very concentrated in terms of the size distribution of banks, idiosyncratic shocks at the bank-level do not cancel out in the aggregate but can affect macroeconomic outcomes. Financial openness may affect GDP growth in and of itself, and it may also influence concentration in banking and thus the impact of bank-specific shocks for the aggregate economy. To test these relationships, we use different measures of de jure and de facto financial openness in a linked micro-macro panel dataset. Our research has three main findings: First, bank-level shocks significantly impact on GDP. Second, financial openness lowers GDP growth. Third, granular effects tend to be stronger in financially closed economies.
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Towards Deeper Financial Integration in Europe: What the Banking Union Can Contribute
Claudia M. Buch, T. Körner, Benjamin Weigert
IWH Discussion Papers,
Nr. 13,
2013
Abstract
The agreement to establish a Single Supervisory Mechanism in Europe is a major step towards a Banking Union, consisting of centralized powers for the supervision of banks, the restructuring and resolution of distressed banks, and a common deposit insurance system. In this paper, we argue that the Banking Union is a necessary complement to the common currency and the Internal Market for capital. However, due care needs to be taken that steps towards a Banking Union are taken in the right sequence and that liability and control remain at the same level throughout. The following elements are important. First, establishing a Single Supervisory Mechanism under the roof of the ECB and within the framework of the current EU treaties does not ensure a sufficient degree of independence of supervision and monetary policy. Second, a European institution for the restructuring and resolution of banks should be established and equipped with sufficient powers. Third, a fiscal backstop for bank restructuring is needed. The ESM can play a role but additional fiscal burden sharing agreements are needed. Direct recapitalization of banks through the ESM should not be possible until legacy assets on banks’ balance sheets have been cleaned up. Fourth, introducing European-wide deposit insurance in the current situation would entail the mutualisation of legacy assets, thus contributing to moral hazard.
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Natural-resource or Market-seeking FDI in Russia? An Empirical Study of Locational Factors Affecting the Regional Distribution of FDI Entries
K. Gonchar, Philipp Marek
IWH Discussion Papers,
Nr. 3,
2013
Abstract
This paper conducts an empirical study of the factors that affect the spatial distribution of foreign direct investment (FDI) across regions in Russia; in particular, this paper is concerned with those regions that are endowed with natural resources and market-related benefits. Our analysis employs data on Russian firms with a foreign investor during the 2000-2009 period and linked regional statistics in the conditional logit model. The main findings are threefold. First, we conclude that one theory alone is not able to explain the geographical pattern of foreign investments in Russia. A combination of determinants is at work; market-related factors and the availability of natural resources are important factors in attracting FDI. The relative importance of natural resources seems to grow over time, despite shocks associated with events such as the Yukos trial. Second, existing agglomeration economies encourage foreign investors by means of forces generated simultaneously by sector-specific and inter-sectoral externalities. Third, the findings imply that service-oriented FDI co-locates with extraction industries in resource-endowed regions. The results are robust when Moscow is excluded and for subsamples including only Greenfield investments or both Greenfield investments and mergers and acquisitions (M&A).
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State Aid in the Enlarged European Union: Taking Stock
Jens Hölscher, Nicole Nulsch, Johannes Stephan
From Global Crisis to Economic Growth. Which Way to Take?, Vol. 1,
2012
Abstract
In the early phase of transition that started with the 1990s, Central and Eastern European Countries (CEECs) pursued economic restructuring that involved massive injections of state support. With reference to the history of state aids in centrally planned economies we display state aid practices of CEECs since full EU membership and analyse whether their industrial policies during and after transition challenged the European state aid legislation and whether these fit into the EUs strategy of ‘less but better targeted aid’. Therefore, qualitative analysis in case studies is used to supplement a quantitative description of state aid levels in East and West. Findings suggest that in recent years a level playing field across the EU has indeed emerged. In fact, the most pronounced differences in this respect are not observed between CEECs and the EU-15 but rather between Northern and Southern member states.
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Selektivität, soziale Bindung und räumliche Mobilität - Eine Analyse der Rückkehrpräferenz nach Ostdeutschland
Lutz Schneider, Alexander Kubis, D. Wiest
Zeitschrift für Wirtschaftsgeographie,
Nr. -1,
2011
Abstract
Selectivity, social ties and spatial mobility. An analysis of preferences for return migration to East Germany. In the public debate, brain drain from East Germany is supposed to be the most critical trend regarding the development and catching up of the New Länder. Therefore, potential for in- and re-migration has attracted much attention at least in the political context. Our contribution analyses the remigration potential on basis of data from a DFG research project focussing on the re-migration intentions of people formerly emigrated from Saxony-Anhalt. The analysis concentrates on the following aspects: the effect of job market success after emigration; the impact of social ties to the origin and the host region and on the selectivity of re-migration preferences. The econometric results confirm several expected effects: On the one hand an individual’s job market success reduces the intention to return. Likewise, the re-migration preference increases for people whose expectations were disappointed. On the other hand, the relevance of social ties to the origin region for re-migration dispositions is confirmed by the estimations. Yet, regarding selectivity of re-migration preferences in terms of human capital econometric results are somewhat ambiguous.
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Political Institutionalisation and Economic Specialisation in Polycentric Metropolitan Regions – The Case of the East German ‚Saxony Triangle‘
Peter Franz, Christoph Hornych
Urban Studies,
2010
Abstract
The rising focus of politicians as well as scientists in the EU on the large urban agglomerations as centres of economic growth is accompanied by political efforts to identify and to demarcate such agglomerations under the label ‘metropolitan regions’. This study develops a theoretical framework broaching the issue of cooperation between municipalities from the perspective of regional economics as well as political science. The framework is applied to the empirical case of the polycentric metropolitan region of the ‘Saxony triangle’ in east Germany. The results show that various intervening factors prevent intense co-operation between the actors in the region. Policy implications and conclusions for future research are discussed.
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Volatile Multinationals? Evidence from the Labor Demand of German Firms
Claudia M. Buch, A. Lipponer
Labour Economics,
Nr. 2,
2010
Abstract
Does more FDI make the world a riskier place for workers? We analyze whether an increase in multinational firms' activities is associated with an increase in firm-level employment volatility. We use a firm-level dataset for Germany which allows us to distinguish between purely domestic firms, exporters, domestic multinationals and foreign multinationals. Employment in multinationals could be more volatile than employment in domestic firms if multinationals were facing more volatile demand or if they react more to aggregate developments. We therefore decompose the labor demand of firms into their reaction and their exposure to aggregate developments. We find no above-average wage and output elasticities for multinational firms.
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Local Economic Structure and Urban Growth in Germany
Michael Schwartz, Christoph Hornych, Martin T. W. Rosenfeld, Annette Illy
Journal of Urban Economics,
2010
Abstract
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Central Banks, Trade Unions and Reputation – Is there Room for an Expansionist Manoeuvre in the European Union?
Toralf Pusch, A. Heise
Journal of Post Keynesian Economics,
2010
Abstract
Seit der Gründung der Europäischen Wirtschafts- und Währungsunion hat sich am Problem der hohen Arbeitslosigkeit in der Eurozone wenig geändert. Der überwiegenden Sichtweise zufolge ist dies vor allem auf dysfunktionale Arbeitsmärkte zurückzuführen. In diesem Beitrag gehen wir der Frage nach, welche Änderungen sich ergeben können, wenn Gewerkschaften und Zentralbank in einem Klima der Unsicherheit zwischen verschiedenen Optionen wählen können. Das wahrscheinlichste Ergebnis im einstufigen Spiel ist eine hohe Arbeitslosenquote. Bei einer Wiederholung des Spiels können sich die Ergebnisse deutlich ändern. Dies wird allerdings dann unwahrscheinlich, wenn die Zentralbank ein außerordentlich hohes Gewicht auf Preisstabilität legt. Zweitens erfordert ein Vollbeschäftigungs-Gleichgewicht ein Mindestmaß an Kooperationsbereitschaft bzw. Koordinierungspotential auf Seiten der Gewerkschaften.
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